
13		COMMITMENTS AND CONTINGENT LIABILITIES

Leases

Total rental expense for operating leases was $24,399, $22,166, and $21,840 for the fiscal years ended October 31, 2013, 2012, and 2011, respectively. As of October 31, 2013, future minimum lease payments under noncancelable operating leases amounted to $73,165 as follows: 2014, $14,632; 2015, $12,544; 2016, $9,307; 2017, $5,283; 2018, $4,212 and after 2018, $27,187.

Customer Financing

Wholesale Financing. In fiscal 2009, Toro Credit Company sold its receivable portfolio to Red Iron, the company's joint venture with TCFIF. See Note 3 for additional information related to Red Iron. Some products sold to independent dealers in Australia finance their products with a third party finance company. This third party financing company purchased $26,526 of receivables from the company during fiscal 2013. As of October 31, 2013, $13,273 of receivables financed by the third party financing company, excluding Red Iron, was outstanding.

The company also enters into limited inventory repurchase agreements with third party financing companies and Red Iron for receivables financed by third party financing companies and Red Iron. As of October 31, 2013, the company was contingently liable to repurchase up to a maximum amount of $10,153 of inventory related to receivables under these financing arrangements. The company has repurchased only immaterial amounts of inventory under these repurchase agreements since inception.

End-User Financing. The company has agreements with third party financing companies to provide lease-financing options to golf course and sports fields and grounds equipment customers in the U.S. and select countries in Europe. The company has no contingent liabilities for residual value or credit collection risk under these agreements with third party financing companies.

From time to time, the company enters into agreements where it provides recourse to third party finance companies in the event of default by the customer for lease payments to the third party finance company. The company's maximum exposure for credit collection as of October 31, 2013 was $1,744.

Purchase Commitments

As of October 31, 2013, the company had $8,400 of noncancelable purchase commitments with some suppliers for materials and supplies as part of the normal course of business. The company also entered into an agreement for the construction of a new corporate facility at its Bloomington, Minnesota location for a maximum obligation, subject to certain exceptions, of $19,876.

Letters of Credit

Letters of credit are issued by the company during the normal course of business, as required by some vendor contracts. As of October 31, 2013 and 2012, the company had $12,681 and $12,963, respectively, in outstanding letters of credit.

Litigation

General. The company is party to litigation in the ordinary course of business. Such matters are generally subject to uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. Litigation occasionally involves claims for punitive, as well as compensatory, damages arising out of the use of the company's products. Although the company is self-insured to some extent, the company maintains insurance against certain product liability losses. The company is also subject to litigation and administrative and judicial proceedings with respect to claims involving asbestos and the discharge of hazardous substances into the environment. Some of these claims assert damages and liability for personal injury, remedial investigations or clean up and other costs and damages. The company is also typically involved in commercial disputes, employment disputes, and patent litigation cases in which it is asserting or defending against patent infringement claims. To prevent possible infringement of the company's patents by others, the company periodically reviews competitors' products. To avoid potential liability with respect to others' patents, the company regularly reviews certain patents issued by the United States Patent and Trademark Office and foreign patent offices. Management believes these activities help minimize its risk of being a defendant in patent infringement litigation. The company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, where the company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. In the opinion of management, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect its consolidated results of operations, financial position, or cash flows.

Canadian Lawnmower Engine Horsepower Marketing and Sales Practices Litigation. In March 2010, individuals who claimed to have purchased lawnmowers in Canada filed class action litigation against the company and other defendants that, similar to the class action litigation previously filed by plaintiffs in the United States and settled by the company pursuant to a settlement agreement that became final in February 2011, (i) contained allegations under applicable Canadian law that the horsepower labels on the products the plaintiffs purchased were inaccurate, (ii) sought certification of a class of all persons in Canada who, beginning January 1, 1994 purchased a lawnmower containing a gas combustible engine up to 30 horsepower that was manufactured or sold by the company and other defendants, and (iii) sought under applicable Canadian law unspecified compensatory and punitive damages, attorneys' costs and fees, and equitable relief. In June 2013, the company and certain other defendants, in order to avoid further protracted and expensive litigation, entered into a settlement agreement to resolve all claims against them in the Canadian litigation. As a group, such settling defendants agreed to pay an aggregate amount of CAD $4,200. In September 2013, courts in Ontario and Quebec held hearings to consider the settlement, which was subsequently approved and became final in October 2013.